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Limits to Global Energy Supply The planet has very large energy resources. We can use much less energy for the same outputs: heating/cooling; distance travelled; things produced. But we face some very tough limits – (a). Conventional fossil fuels: 1. The global maximum in the production of conventional oil at current prices is probably about now. 2. The global maximum in the production of conventional gas is probably in 10 to 15 years. 3. We may be close to the global maximum in the production of conventional hard coal.

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Limits to Global Energy Supply contd. (b). Alternative fuels: 4. Most of the alternative fuels - fossil as well as renewable - have lower energy returns. 5. We face rate-limits in moving to these alternatives. (c). Other limits: 6. High energy cost destroys economies. 7. Greenhouse gas (‘GHG’) emissions. We have known about many of these limits for a long time, but they largely got forgotten. Most are not in current models (let alone in the thinking of industry or government). As a result, we do not understand our energy future.

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General Remark: These are a lot of topics – and some strong claims. I cannot cover in full detail here, so: - Skim over detail - apologies to those who do not like this approach in a presentation. - The slides will be available.

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Limit 1: The maximum in the global production of conventional oil. To understand this limit you need to know: i). There is a lot of oil & ‘nearly oil’. ii). Never use proved (‘1P’) reserves. iii). Use oil industry proved+probable (‘2P’) data for oil discovered, and likely to be discovered. iv). ‘Mid-point’ peaking. v). Why ‘mainstream’ forecasts were so wrong. Start by looking at oil production and price.

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Global oil production and price, Global all-oil production: weak growth since Real-terms price back to that of the 1978 oil shock. The current high oil price cannot be driven fundamentally only by demand: from 1861 to 1970 demand grew rapidly but the price fell. BP Stats.: E.Mearns

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Maximum in global production of conventional oil i). There is a lot of Oil & ‘Nearly oil’ Conventional oil: Light- and medium-density oil that has generally migrated to a permeable reservoir, and from which it can be extracted by own-pressure, or gas and/or liquid drive. (Can include heavier oil in a permeable reservoir made mobile by steam heating). Data often includes liquids produced from gas fields (‘natural gas liquids’, NGLs). Non-conventional oil: Tar sands (Canada), & very heavy oil (e.g., Orinoco) Shale oil (pref. ‘tight oil’): Oil in low-permeability source rock that has not migrated, often shale but can be sandstone, limestone; usually needs hydraulic fracturing (‘fracking’) to produce. Oil from oil shale: Kerogen in source rocks; needs retorting to turn into oil; produced by mining or in-situ methods. Gas to liquids (GTL); Coal to liquids (CTL) Biofuels; Other.

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ii). Never use proved reserves (‘1P’) data These data are: Understated, particularly early in a field’s development. Overstated in some Middle East countries. Not stated: often static for countries for long periods. iii). For forecasting must use oil industry proved + probable (‘2P’) backdated data. The evolution of 1P (‘political/financial’) global oil reserves is very different from that of backdated 2P (‘technical’) reserves: - 1P data show reserves always increasing; - 2P data show that reserves peaked in 1980 (next slide). By P reserves exceeded 2P due to ‘quota wars’! (Note: Since 2000, 1P data include non-conventional oil.)

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iv). ‘Mid-point’ peaking: When to expect the resource- limited peak of global conventional oil production This needs industry 2P cumulative discovery data i.e., (produced to-date) + (remaining reserves). Most analysts: - Did not know they needed these data - were happy to work with 1P. - Did not have access - are expensive to license, or much work to assemble. - Did not know how to use the data - did not understand ‘mid-point’ peaking. N.B. ‘Mid-point’ peaking is short-hand for the complex interplay of geology (field- size distribution), physics (pressure decline and/or increasing water-cut in fields), and economics (marginal vs. avg. cost) that drives a region’s production to peak well before all the recoverable resource has been produced.

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‘Mid-point’ peaking in a region: Peak is driven by discovery (big fields first) and by field decline. Discovery Production Assumes fields take 5 years to get into production Peak is counter-intuitive: It occurs when production has been rising; reserves are large; new fields are being discovered; & technology is raising recovery factors..

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So: Conclusions on Conventional oil Current constraints on global conventional oil production due to: - Below-ground: Discovery of oil in new fields in decline for ~50 years; production decline in fields, especially large-old. - Above-ground: Access by multinationals to some countries; Iran production; Saudi Arabia reluctant to pump all possible, etc. But there have always been above-ground factors. To-day’s high oil price is primarily due to resource limits on the production of global conventional oil. We do not really know how fast non-conventional oil supply can grow: mainstream forecasts say ‘sufficiently’; peak say ‘not’. Today’s high price is ‘The End of Cheap Oil’. Caution: Price reflects small differences in supply & demand, so is hard to predict and likely to be volatile. Oil costs go up due to depletion, more difficult fields, EROEI, etc.; but price destroys demand and brings on new projects. In short-term prices can fall.

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Limit 5: Rate-limits in moving to these other fuels Changing to a new energy-saving measure, or new energy source, faces rate-limits that are sometimes overlooked. These include: technological & society readiness, availability of investment, limits to inputs such as water or gas, and net-energy rate-limits. The latter are often forgotten, and may be critical. E.g. Because of rapid growth, the total PV installed to-date (~ 100 GWp) has not yet returned any net-energy to Mankind. The date for positive net-energy return is unclear. See: Dale & Benson. Energy Balance of the Global Photovoltaic (PV) Industry - Is the PV Industry a Net Electricity Producer? Environ. Sci. Technol., 2013, 47 (7), pp 3482–3489. Also: Prieto & Hall: Spain’s Photovoltaic Revolution - Energy Return on Investment ISBN:

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Limit 6: High energy cost destroys economies OPEC exports now cost importers $1 tn./yr., real-terms, as in [Note the rapidly rising internal demand within OPEC.] There is a very poor understanding of the impacts of high energy cost on economic activity. Authors such as Slessor, Odum, Hawker, Lovins & Lovins, Kümmel, Ayers, and Hall and Klitgaard suggest new paradigms, but I guess (I am not an expert) that none has been adequately tested. To understand the future, the links between availability of energy and economic activity need to be properly understood.

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Conclusions The planet has immense energy resources. We can use much less energy than now. But we face some tough energy limits: - Peak conventional oil: probably about now. - Peak conventional gas: ~10 to 15 years from now. - Peak conventional hard coal: possibly fairly near. - Lower EROEI of non-convs. & renewable energies. - Limits to rate-of-change; incl. net-energy. - Impact of energy cost on global economic activity. - Greenhouse gases. We long knew about many of these limits, but were forgotten. They must be taken into account.